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12/14/2012

Happy Holidays & an Evidence-Based New Year!

While the year isn't quite over yet (many of us still have holiday shopping to do and there is the potential end-of-world scenario on the 21st to consider), 2012 has been heralded in business buzz as the Year of Big Data. Research suggests, however, that many of us compensation pros (and our HR partners) either didn't get the memo or left it buried in our in-boxes. Same seems to be true for the related field of evidence-based management and the notion of seeking and using evidence to make better-informed decisions.

In his article Evidence-Based Rewards Management in WorldatWork's Journal (Q3 2012), Robert Greene talks about the importance of moving our profession to a more evidence-based approach. He also highlights a number of the obstacles we face in getting there. I highlight and discuss a few of these below.

One obstacle: Understanding data analysis

To create and use evidence in our work, we must have a basic understanding of quantitative data analysis. The problem, as Greene notes, is that many universities do not require this as part of their coursework, even at the graduate level. Even worse, as someone who serves as a regular instructor in professional certification coursework, Greene observes that not only do many practitioners lack quantitative skills, few of us feel any need to acquire them. This conclusion is bolstered by the results of an informal study we featured here about what HR professionals want to do in their jobs, conducted by fellow blogger Sharlyn Lauby. Compensation and benefits (the most quantitative fields of HR) clearly come out as the least favorite. Sharlyn's take on the study results was that HR pros don't mind spending time on the essence of rewards (but may prefer to avoid the deep dive). Doesn't sound like a crowd eager to embrace analytics, does it?

Now I'm no expert in quantitative analysis and my skills are rusty from years of minimal use, but my second favorite class in graduate school was a course called Multiple Linear Regression. I'm not kidding; hear me out. I took it because, at the time, I was enmeshed in selling and implementing a regression-based job evaluation tool (Multicomp anyone?). I was floored by how much I enjoyed it. You dump data into a regression model and out come -- if you know how to look for them -- stories and insights. It's like CSI, only you're investigating people and pay. All that I'm saying is give multiple regression a chance.

Another obstacle: Accessing and understanding research

Greene notes another underutilized opportunity -- accessing the evidence available to us through the thousands of research studies that have been done in the field of organizational behavior. He asserts that there is a problematic gap between research and practices in compensation and discusses some of the reasons for this. Many of us don't read the journals where the most rigorous research findings are published. (When was the last time you picked up a copy of Academy of Management Journal? Same here.) Further, academics have reward structures that drive them to conduct and publish research that is focused on theory and heavy on quantitative analysis -- attributes that make the research less accessible and helpful to those of use trying to make pay work in the real world. So instead, compensation and HR pros tend to draw their "evidence" from popular books and articles that often fail in their claim to be truly "research based."

This is a problem. I make a regular effort to read research in our field, and (as a non-PhD) I often find it to be a real slog with little payout for the effort. I give props to WorldatWork for attempting to bridge this gap with efforts like Kevin Hallock's "research for the real world" column in workspan magazine, where the good professor distills and explains the key findings of recent studies in the reward field. (Although I also have to chide them for discontinuing mailing hard copy of the Journal to premier members, so that I am forced to regularly search online if I want exposure to articles like Greene's.)

Evidence abounds that evidence-based management is in our future. We can either get on the bus or end up underneath as it roars by.

Ann Bares is the Founder and Editor of the Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. Ann was recently named President Elect of the Twin Cities Compensation Network (the most awesome local reward network on the planet) and has joined the Advisory Board of the Compensation & Benefits Review, the leading journal for those who design, implement, evaluate and communicate total rewards. She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time. Follow her on Twitter at @annbares.

Comments

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Well said, Ann. In my opinion, another risk here relates to the excuse of being "too busy to learn that stuff." With such an excuse, one could wake up one day to discover that less experienced analysts ARE well equipped for data analysis and an evidence-based approach. When that happens, it will be too late to look for the bus...

I'm increasingly troubled by all the assertions of stupendous results in company performance that ___ (you fill in the blank) tout is the result of high employee engagement, high mployee satisfaction (supposedly different from engagement), great T&D, great comp, etc. You name it.

HR as a whole --- in my experience --- is not that analytically inclined including compensation. WE (myself included) tend to bury our noses in spreadsheets and survey input/output but don't go much further than that. I question the result on the WatW survey above that asks if HR is quite/very competent in the use of analytics. The answer was overwhelmingly yes. Just really question that . . . If so, then why don't we see more of it???

Lost my train of thought. I'm worried about the fact that HR seems to be all "agog" by all the wild assertions of increased profits, creativity, stock price, revenues, profit margins, etc. due to high engagement scores,etc. Sort of like Daniel Pink. Wave the flag, spout the assertions, serve beef and you have a bunch of pumped up, cheering HR people who never question the numbers/stats behind the assertion.

See my article on this in TLNT. I'm really worried. I took stat courses in college too Ann. I know enough to be dangerous --- but on the other hand I DO know enough to raise a lot of questions.

Great comments and observations. Yes, our "disinclination" towards numbers and analysis puts us at risk to chase claims and assertions that authors and consultants put forward, but cannot (in truth) withstand a closer examination of the evidence.

Great article noting the common confusion between correlation and causation - readers, please be sure to click through and read.

The WorldatWork Journal publishes articles like these periodically to keep us abreast of recent research:

Compensation Professionals Should Know About 10 Recent Studies

By Steve Werner, Ph.D., and Naomi K. Werner, University of Houston

Several recent academic studies have focused on compensation-related issues. This paper identifies 10 that are particularly relevant to compensation professionals. These studies explore the important issues of pay justice, global pay plan design and compensation system design. By focusing on each study’s agenda, its findings and the bottom line for compensation professionals, the authors show how these studies can increase compensation professionals’ understanding of important issues as supported by theoretical and analytical rigor. Additionally, the authors offer some overall conclusions by looking across the studies.